The president of the European Central Bank (ECB), Christine Lagarde, anticipates a slowdown in the economic activity of the euro zone in the third quarter due to a large extent to the tariff uncertainty, with an economic agreement with Trump that has left the European Union dissatisfied.
Lagarde provides that the Eurozone will lose economic impulse as long as the new tariffs are implanted and commercial flows are normal after the measures in the anticipation of the rates applied in the first months of the year. In addition, the concrete tax that will receive sectors such as semiconductors or medicines, after an agreement with the United States that the ECB itself considers “well below” of the worst setting planned, is not yet known.
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A deceleration in EU’s economic growth
“Growth is expected to slow down in the third quarter as this anticipation will be diluted,” said the president of the ECB, in an intervention that took place while the International Business Council of the World Economic Forum was celebrated, in Geneva. Lagarde has also said that the recent commercial agreement reached between the European Union and the United States imposes higher tariffs on the merchandise of the euro zone compared to the situation prior to April, which only makes the circumstances for the eurozone economy worse.
Taking this into account, Lagarde recalled that the commercial agreement with the United States establishes an average effective tariff between 12% and 16% for products traveling from the EU to the North American country, which exceeds (although not much) to the cases used by the ECB in its projections.
“The result of the commercial agreement is well below the severe scenario of American tariff
To this, the president of the ECB adds that “uncertainty persists” in terms of some commercial transfers, because not all concrete product levies have been defined, especially in regard to pharmaceutical and semiconductor products.
Therefore, the ECB will take into account the implications of the commercial agreement between the EU and the United States for the Equipment Economy in the September projections, since they will mark the line to be followed in the decisions of the Governing Council of the entity during the next months.
That does not mean that the United States remains considered a relevant commercial partner for the European Union, as defended by the Lagarde or President von der Leyen on other occasions.